Economic Growth, Malthus, and Technological Diffusion

History of Economic Growth and the Malthusian Trap

Stagnation and Early Explosions

Until approximately $1700$, the global economy experienced stagnation, with virtually no growth in global GDP per person. A graph of global GDP per person would show a flatline until the early $1800s$. Over the $17$ centuries preceding $1700$, global output grew at an average rate of $0.1\%$ per year, meaning it took nearly a millennium for production to double at this rate.

The Industrial Revolution marked a significant turning point. With innovations like spinning jennies and steam engines, global growth quintupled to $0.5\%$ per year between $1700$ and $1820$. By the end of the $19^{th}$ century, this rate reached $1.9\%$. In the $20^{th}$ century, the average annual growth was $2.8\%$, a rate at which production doubles approximately every $25$ years (consistent with the Rule of $70$ where $70 / 2.8 = 25$). Economic growth not only became the norm but also accelerated.

The Malthusian Trap and its Refutation

Historically, economies grew primarily through population accumulation, particularly in agrarian societies. More people meant bigger harvests, which in turn fed more mouths, but this did not necessarily improve living standards. Instead, famine was a constant threat.

Thomas Malthus, an $18^{th}$-century economist, theorized that population growth would inevitably outstrip agricultural yields, leading to widespread poverty. This Malthusian Trap suggested that increases in labor ($L$) would dilute total factor productivity ($A$) and the capital stock ($K$), preventing sustained improvements in living standards. Thus, technological advancements could be simultaneously accompanied by famine.

However, history proved the reverse. More people not only consumed more but also generated more ideas. This created a